Have you tested your strategy lately? Five things that make a bad strategic plan & Is there a Covid return on luck?
28 August 2022 Newsletter
“The most important part of every plan is planning on your plan not going according to plan.” ― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness
Hope you’re Thriving!
It’s been a good week with lots of work on the new Onboarded book and a 2-day strategic planning workshop. Over the years, with the company at that workshop, we have focused on how to be different, and we’ve had some remarkable success.
But also, over the years, we’ve come to realise that it’s simply not possible to set the price in that business. The customers and the market set the price. And, when that’s the case, if you can’t control the price, you must control the expenses. So the only way we can build an enduring business is to become excellent at managing efficiency.
Strategy is Harder
And knowing that the company above was pivoting, or at least the focus was turning to control expenses, reminded me of why strategic thinking is harder than execution planning.
Execution plans tell us how to allocate resources.
Strategy plans tell us how to earn revenue.
Execution plans are easier because we’re in control of resource allocation (money, people etc.).
Strategy plans are harder because we’re not in control of customer spending.
In order to endure, you must successfully execute both.
Covid return on luck
This week I was reflecting again on our event from Jim Collins from a couple of weeks ago. There was one point in particular that stuck with me.
Covid was a massive luck event. Covid was unexpected and produced both good luck for some, and bad luck for others. We couldn’t predict it, and we couldn’t predict its impact. And luck events produce the opportunity for what really matters – return on luck.
From Jim’s website:
“The great companies were not generally luckier than the comparisons—they did not get more good luck, less bad luck, bigger spikes of luck, or better timing of luck. Instead, they got a higher return on luck, making more of their luck than others. The critical question is not, Will you get luck? But What will you do with the luck that you get?”
“The evidence leads us to conclude that luck does not cause 10X success. People do. The critical question is not “Are you lucky?”
but “Do you get a high return on luck?””
So let’s turn this into something tangible. Take a few minutes and write down a list of the few people who surprised you on the upside through Covid.
For many leaders, some of your team have underperformed, and others overperformed through Covid. Under the pressure of Covid, the overperformers took responsibility and accountability themselves.
Leveraging the luck concept above, you should explicitly note who those people are and make them a bigger part of your leadership today.
That is return on luck.
Have you tested your strategy lately?
This week I came across an article that asks about testing your strategy. It’s a few years old, but the questions are still valid. Interestingly, in a survey of 2,135 companies, most companies passed fewer than four of these tests.
The questions are:
Test 1: Will your strategy beat the market?
Test 2: Does your strategy tap a true source of advantage?
Test 3: Is your strategy granular about where to compete?
Test 4: Does your strategy put you ahead of trends?
Test 5: Does your strategy rest on privileged insights?
Test 6: Does your strategy embrace uncertainty?
Test 7: Does your strategy balance commitment and flexibility?
Test 8: Is your strategy contaminated by bias?
Test 9: Is there conviction to act on your strategy?
Test 10: Have you translated your strategy into an action plan?
Read the article here: Have you tested your strategy lately?
This week on The Growth Whisperers podcast
Five things that make a bad strategic plan
What makes a bad strategic plan?
According to Harvard Business School, 92% of business plans fail due to poor execution, and so getting a plan that succeeds, is difficult.
Your strategy should clearly explain your direction, and how you will be different from your competition. Then, your execution plan should detail specifically where to commit your resources of time and money to ensure you execute that strategy.
In this episode, Kevin and Brad discuss five things that make a bad strategic plan, and how you can avoid those, to build more effective strategic plans, that succeed more often.
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